Thinking Realistically About Family Leave Policies at Startups

Why every startup should have one, even if they don’t yet need it, and what a good one looks like. tl;dr: writing the policy is not that hard; most failures happen in the implementation.

Family leave is important. Last year, there was a glimmer of hope that the US would no longer be one of the sole remaining developed countries not to implement paid family leave on a national scale. That glimmer is beginning to fade, but the discussion about it serves as a reminder that employees have lives and families that they need time to care for. That time includes, but is not limited to, parental leave for new parents — mothers, fathers, adoptive parents, same-sex couples; caregiver leave for employees caring for a seriously ill family member; and medical leave for employees dealing with a serious illness themselves.

Startup teams often comprise fewer than ten people and rarely include anyone with an HR background. Consequently, drafting and implementing a paid leave policy can be daunting. Doing so is critically important, but it’s rarely treated as a hair-on-fire problem. It’s also laden with challenging tradeoffs for young resource-strapped teams who need to hire above their weight class, but who can’t fathom months without a key employee. All of that said, I have yet to meet a single founder or CEO who doesn’t believe in the importance of family, caregiver, or medical leave or who doesn’t plan to offer it to his/her employees.

Yet with a few exceptions, the vast majority of startups that I work with do not actually put an official policy in place till they need it (read: till their first employee has a baby or a family emergency).

The delay in drafting a policy is understandable, but no longer acceptable. It often results in a hastily-drafted policy that needs to be amended over time. Over the short term, the delay can create frustration, confusion, and inequity among team members. Over the long term, it’s a detriment to both hiring and retention: it misses an opportunity to signal to job candidates that the startup offers a good work environment for families, and it contributes to the startup actually failing to be a good work environment for families. Companies cannot afford to miss or lose a single great candidate. Getting the right leave policy from the start and implementing it well is necessary and not that complicated. Here’s a step-by-step guide.

Step One: Write the Policy Down

The leave policy itself is fairly simple. There are a few key decisions a company should make:

What types of leave do you want to offer?

• Most companies include three main types of leave: 1) Parental leave, which gives families time to adapt to the acquisition of new children by birth or adoption or whatever, 2) Caregiver leave, which gives employees time to support ill or otherwise in-need family members for whom they serve as the main caregiver, 3) Personal medical leave, which gives employees time off to recover from a serious illness.

To whom should it apply?

• Employee populations. Startups (and big companies) increasingly use a mix of W2 employees and contractors. Some also combine full-time and part-time staff. Family/medical leave benefits used to apply primarily to full-time W2 employees. But it’s important to think broadly about who you want your family leave to apply to. Large companies have generally excluded part-time employees and contractors, but there’s a growing push to extend them benefits–especially with the increased use of contractors in long-term positions, and especially for startups that leverage remote contractor talent. These employees should be considered for leave as well.
• Defining employee segments. Historically, most companies talked about maternity and paternity leave, but many companies redefined their policies for primary and secondary caregivers to include adoptive parents and same-sex couples equally. This way of framing policies has evolved yet further to distinguish birthing from non-birthing parents, and to recognize a need for non-birthing parents to have more leave time. This approach promotes family bonding, as well as more equitable gender and family structures. In addition, caregiver leave applies to any employee who serves as the primary caregiver for a seriously ill family member.

How long should it last?

• Paid leave duration. For parental leave, six weeks is the bare minimum (and unacceptable for any startup that’s competing for talent). Twelve weeks used to be the standard, but many companies (including startups) seem to be moving toward a more generous sixteen weeks. Pediatricians and public health officials recommend six months, but that may be difficult for a young, cash-strapped, fast-moving startup. Yet as competition for talent continues, some startups (especially later-stage ones) should consider it. Caregiver leave is usually up to 12 weeks, depending on the situation.
• Option to add unpaid leave. If you want to offer additional time on top of a paid leave policy, you can offer unpaid leave. You might limit that to a certain amount of time, usually a few months. The cost to an early-stage startup of losing any employee for a long period of time can be high, even if the leave is unpaid. As with any unpaid leave, it’s reasonable to consider pausing other forms of compensation, such as option grant vesting.
• Flexible work arrangements. Some companies choose to offer flexible arrangements such as part-time or work-from-home for a period of time after the leave. For part-time work, you can scale the compensation accordingly.

How should compensation and other benefits be treated during leave?

• Salary. Employee compensation typically continues at 100% during the paid leave, but depending on the benefits package, Short-Term Disability may cover 50–100% of the employee wages. Depending on the state, there may also be payroll deduction programs to offset a portion of employee wages.
• Benefits. Healthcare benefits should continue during the paid leave period and typically also the unpaid leave, but may be considered case-by-case for extended unpaid leaves.
• Employee Options. Other compensation, like employee stock options, should continue during paid leave, but may be paused during unpaid leave.

Here’s a table laying out what seems to be considered normal for early-stage startups:

And here’s a template that you can copy/paste/edit:

[Company Name] offers [#] weeks of paid [Type] leave after the birth or adoption of a child for the purposes of bonding. All full-time [or part-time] employees are eligible for [Type] leave. [Type] leave will be paid at [100%] of the employee’s regular pay. [After [#] weeks, the employee is eligible for [#] additional weeks of unpaid leave.]

[Full-time] employees are entitled to take [one] [Type] leave per [calendar year or another time period]. Leave can be used in [[one continuous block during the first year] or [anytime during YY time period]].

And here’s a recommended one:

[Company Name] offers 16 weeks of paid leave for birthing parents and 12 weeks of leave for non-birthing parents after the birth or adoption of a child for the purposes of bonding. All full-time and part-time employees are eligible for leave. Leave will be paid at 100% of the employee’s regular pay.

Full-time and part-time employees are entitled to take one leave per calendar year. Leave can be used in one continuous block during the first year.

All full-time and part-time employees are also eligible for up to 12 weeks of paid caregiver leave and 12 weeks of paid medical leave, depending on the situation.

Step Two: Make Everyone Aware of the Policy

Writing the policy is not that hard, but it’s also not trivial. Once you’ve gone through the exercise of answering the above questions, the absolutely critical next step is to make sure everyone knows what the policy is. They also need to be able to easily find/reference it. Even if your policy is incredibly generous, employees will feel frustrated and anxious if they misunderstand it or don’t know about it. At the very least, it’s worth a slide in an All Hands deck. And every time there’s a change, highlight the change at the All Hands. The policy explanation should live alongside your other HR policies like benefits, vacation, paid time off, expenses, etc. in your Employee Handbook (if you have one) or wherever you house such policies. Finally, when you onboard someone, include it in your onboarding materials/process so people know about it long before they actually need it.

Here are some more good practices:

• Clearly communicate who is the point of contact for making leave requests (a manager, CFO, COO, etc.), especially if you don’t yet have an HR professional.
• Clearly explain what you require from employees when they go on leave. For example, some benefits plans require that the employee give advance notice (usually at least 30 days) and apply for short-term disability to cover part of their salary. The specifics depend on the company, benefits plan, and state, and it’s best to sort it all out before anyone goes on leave. Your benefits provider is a good starting point. Also, several companies exist to help make it easy, such as (without endorsement) Larkin, Sparrow, Cocoon, and Tilt.
• Ensure that you are in compliance with federal and state laws protecting employees going on leave (even if your size doesn’t yet subject you to them).

The Pregnancy Discrimination Act applies to companies with 15+ employees and gives pregnant women the same rights as others with “medical conditions” by prohibiting job discrimination. It specifically states that pregnant employees:

• Cannot be fired because they are pregnant;
• Cannot be forced to take mandatory maternity leave;
• Must be granted the same health, disability and sickness leave benefits as any other employee who has a medical condition;
• Must be given modified tasks, alternate assignments, disability leave, if necessary;
• Are allowed to work as long as they can perform the job;
• Are guaranteed job security during leave;
• Continue to accrue seniority and remain eligible for pay increases and benefits during the leave. This is the most important point for most startups to pay attention to, especially in a high-growth environment.

The Family Medical Leave Act applies to companies with 50+ employees and guarantees employees who have worked at least 25 hrs/wk for one year up to 12 weeks of unpaid, job-protected leave each year. It applies to parental leave, caregiver leave, and personal medical leave. The law guarantees that employees who take leave will be restored in an equivalent position with equal benefits upon their return to work.

Some state laws offer more protection and some states provide disability insurance to offset lost wages during leave. You should know what these benefits are because they can offset the company’s wage expense during leave.

Step Three: Implement the Policy Well

Once you write down the policy, broadcast it to your employees, and store it in an easy-to-find location, the next most important thing is to implement it well. The best guidance I’ve heard about implementation is this:

Write the policy you’d want for yourself, and implement it as you’d want it implemented for yourself.

I’ve talked to a number of founders and CEOs about their own leaves. They universally understand the impact their absence will have on their company and team and they all want to minimize disruption.

Many startup employees, especially early employees and team leaders, have shared similar perspectives. They view themselves as owners and want to remain involved; some might not take the full amount of leave to which they’re entitled. But even founders and CEOs take at least a few weeks to disconnect completely from work. They need to ensure that they make key decisions in advance, or deputize people on their team to make them in their absence. After these initial weeks, some choose to join key meetings or a daily standup based on the company’s needs. They may phase back into a partial schedule after a few more weeks and may return to a full schedule (often with some WFH/flexibility) after a few more.

Here’s how you can maximize both flexibility and clarity when implementing your leave policy:

Before the leave:

• Establish a clear plan for what happens to the employee’s responsibilities in his/her absence. Which work is put on hold? What’s handed off to colleagues? What org chart modifications (e.g., for handing off direct reports) are made while the employee is out? Who’s deputized to make key decisions while the employee is out? Which topics or decisions merit contacting the employee during his/her leave?
• Decide on a point of contact for specific topics while the employee is out. This roster could be included in an OOO email to ensure seamless communication during the leave.
• Set up that OOO email.
• Help the employee set clear expectations about how involved he/she wants to be in company operations during leave, recognizing that this could change.
• Clearly communicate when the leave begins and how long it’s expected to last. Make the employee’s team and other stakeholders aware of these details.
• Make the employee aware of any other benefits or resources that the company has to support them while on leave, including resources from the benefits provider, such as postnatal support services.

During the leave:

• Guarantee the option of a full, uninterrupted leave.
• Give employees the option to engage in a supportive way (i.e., not disruptive to teams), on their own terms, before the leave is done. This might mean dialing into key meetings or reviewing documents on a flexible schedule, as much or as little as they wish.
• Keep employees updated on key developments in the company as they desire.
• Check-in with employees outside of giving work updates to see how things are going and offer support. (This is more important than it might seem. Not everyone wants to be left alone; most people want to feel supported in a human way, beyond work).
• Allow employees to return from leave early, in a flexible manner, if they so choose.

After the leave:

• Recognize that it’s hard for anyone to come back from an extended absence. Remember the first day of school? Reintegration is critical to a successful leave, but usually an afterthought. Don’t let it be an afterthought. The employee’s manager, peers, and direct reports should all play an active role in supporting the employee to successfully transition back to work.
• Clearly communicate what happened during the employee’s absence. One great practice here is to create a “return to work update” that includes not just what happened during the leave, but also the team’s top priorities so that the employee can get back to adding value during his/her first weeks back.
• Clearly communicate any changes to roles and responsibilities and company priorities, along with the rationale for the changes.
• Trust that the employee is committed to his/her work going forward. Coming back from leave can be challenging for everyone, especially when there’s a new priority at home. Trust is key to helping navigate this period.

Again, use the golden rule — write the policy you’d want for yourself, and implement it as you’d want it implemented for you and your family.

Afterword: This turned into a much longer post and sparked many more discussions than I originally intended. Thank you to the numerous colleagues, former colleagues, and Spero portfolio founders and leaders who added immensely more thought and nuance to this topic than I came in with. I’d love to continue the discussion, especially around what makes for good implementation and transitions back to work. Please comment or reach out to me (sara@spero.vc) if you have additions or more nuance that I missed in this first draft. Thank you!